The branded basmati rice industry in the country has paid a heavy price after the GST roll-out, with some players claiming that the new tax regime knocked nearly 20 per cent off their sales volume.

“The imposition of 5 per cent tax on branded basmati is costing us dearly with the sales going down by as much as 20-25 per cent. As of now, we are losing out to those who are selling non-branded basmati as customers are very price-sensitive and even small increase in the price is turning them away from buying branded products,” said Gurnam Arora, Joint Managing Director of Kohinoor Foods Limited.

“We are being made to suffer despite the fact that we offer customers products of assured quality,” Arora said.

However, an executive associated with a premium basmati rice brand, who doesn’t want to be named, said the dip in sales was only marginal, particularly in the premium product segment, as these consumers are more quality-conscious and thus do not mind paying a few extra bucks. Industry sources, on other hand, flagged another serious issue that emerged since the GST implementation. After the government decided to reduce the GST on restaurants to 5 per cent, from the initial 12 per cent, and denied them input credit, the eateries have begun buying rice, pulses and other food-grade commodities in non-branded bags from registered companies, helping them save margins.

“It is not just the companies that play by the rule book have lost out in the game. Even the government’s revenue accruals are also hit by this,” he said. He, however, hoped the anomaly would be corrected once the e-Way bill gets fully implemented.

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